Elon Musk Announces Tesla Layoffs

Several outlets, including The Wall Street Journal, reported today that Tesla CEO Elon Musk sent an email to his staff indicating that roughly 10 percent of the company’s 140,000 employees globally would be axed as Tesla faces an unusually difficult start to the year. The move is not unexpected; rumors were flying in February after a Bloomberg report indicated that managers were asked to rank employees or note whether they were “critical” to Tesla.

Tesla’s performance has been challenging, as indicated by its 2023 fourth-quarter earnings report, repeated price cuts, and what appears to be a slowing market demand for EVs. Consequently, these factors have produced significant headwinds for the company. Its outlook for 2024 is not rosy; the report indicated lower projected volume for 2024. Moreover, deliveries have declined year-over-year, marking a first for the company in four years.

According to its latest report, the cuts indicate that approximately 14,000 employees will be trimmed in total, equating to 10 percent of its global workforce. Additionally, information from the WSJ report indicates that at least some of the cuts will occur in China, where Tesla has faced slipping sales. Chinese domestic EV manufacturers have unleashed an array of new products that are resonating well with consumers. Interestingly, BYD was at one point last year the world’s largest EV maker until Tesla regained the title. Furthermore, Chinese automakers produce several inexpensive EVs, a segment that Tesla promised to enter, but may not give due to a reported refocusing on the company’s robotaxi product.

Moreover, Tesla faces an array of other challenges, including waning investor confidence, exposure to fluctuations in EV demand, an aging model lineup, and cratering resale values due in part to its recent price-cutting measures.